Compensation for damage caused by an employee

This issue of our newsletter is to inform you about employer rights in situations when they incur damage caused by an employee.

Under the Labour Code, employees are required act in order to prevent the occurrence of any property damage or non-pecuniary loss or unjust enrichment. If there is a risk of damage or non-pecuniary loss, the employee is obliged to notify the superior accordingly.

If the employer incurs damage as a result of an employee’s act or omission, the employer may decide to claim compensation for such damage from the employee. The employer needs to be aware of its rights as well as numerous restrictions arising from the Labour Code that apply to the possibility of claiming damages from the employee.

If the damage has not been caused intentionally or under the influence of alcohol or other addictive substances, the employer may only claim damages of up to 4.5 times the employee’s average monthly earnings before the breach of the obligation that has caused the damage.

Labour law is aimed at the protection of employees as the weaker party in the employment relationship. Consequently, these presumptions also apply in situations in which the employee would undertake voluntarily (in writing) to compensate the employer for damage caused by negligence to an extent greater than 4.5 times his average monthly earnings before causing the damage. Such an agreement would be considered voidable in that part in which the damages claimed by the employer would exceed the limit of 4.5 times the employee’s average monthly earnings.

For completeness, we add that if damage is caused by an employee intentionally, while intoxicated or following the use of other addictive substances, no limit applies to the amount of damages that the employee is required to pay to the employer. In the case of damage caused intentionally, the employee is also obliged to compensate the employer for the loss of profit.